Primerica Chapter 3

What type of insurance would be used for a Return of Premium rider?

Increasing Term

Which nonforfeiture option provides coverage for the longest period of time?

Reduced paid-up

Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third policy?

absolute assignment

Who controls changes in premium payments, face values, and loans in a life insurance policy?

policyowner

Who has the right to the cash value of a life insurance policy?

policyowner

All of the following are dividend options EXCEPT

Fixed period installments

If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer?

lump-sum payment

What are policy dividends?

return of unused premiums

What dividend option is automatically selected by the company if not chosen by the policyowner?

Paid up additions

What nonforfeiture option is automatically selected by the company if not chosen by the policyowner?

extended term

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the

other-insured rider

If the policyowner, the insured, and the beneficiary under a life insurance policy are three different people, who has ownership rights?

policyowner

What nonforfeiture option provides coverage for the longest period of time?

reduced paid-up

Which of the following premium payment modes will incur the lowest overall payment?

Annual

What beneficiary designation has first claim to the death proceeds of a life insurance policy?

Primary beneficiary

What does the term double indemnity mean?

The insurer will pay a benefit of twice the face amount

What is the purpose of a free-look period?

To allow the insured to return the policy with a full refund

Which of the following best describes fixed-period settlement option?

both the principle and interest will be liquidated over a selected period of time

What required provision protects against unintentional policy lapse?

grace period

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

What settlement options are available in life insurance policies?

Lump-sum/cash, fixed period, fixed amount, life income, interest only

Under what nonforfeiture option does the company pay the policy's surrender value and have no further obligations to the policyowner?

cash surrender

What are the three nonforfeiture options in life insurance policies

cash surrender, reduced paid-up, extended term

Which of the following riders would NOT cause the Death Benefit to increase?

Payor Benefit Rider

What life insurance policy provision prevents an insurer from disputing or denying a claim due to misstatements on the application after a certain period of time?

incontestability

What are the dividend options in life insurance policies?

cash, reduced premium, accumulation at interest, paid-up additions, paid up option, one-year term, and acceleration of endowment

What dividend option can increase the death benefit of the existing life policy?

paid-up additions

What is the purpose of settlement options insurance policies?

to determine how the death benefit will be paid to the beneficiary

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called

Paid-up additions

What is the advantage of reinstating a life insurance policy as opposed to applying for a new one?

policy premium in a reinstated will be set according to the insureds original age

With the interest only settlement option, what happens to the policy's death benefit?

policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary

What term is used to describe methods of payment of the death benefit to the beneficiary upon the insured's death?

settlement options